CYRUS INVESTMENTS LTD, MUMBAI v. DCIT 1(1), MUMBAI

ITA 4676/MUM/2010 | 2006-2007
Pronouncement Date: 22-07-2011 | Result: Allowed

Appeal Details

RSA Number 467619914 RSA 2010
Assessee PAN AAACC2880P
Bench Mumbai
Appeal Number ITA 4676/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 17 day(s)
Appellant CYRUS INVESTMENTS LTD, MUMBAI
Respondent DCIT 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 22-07-2011
Assessment Year 2006-2007
Appeal Filed On 04-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH BEFORE SHRI D.MANMOHAN VICE PRESIDENT & SHRI T.R.SOOD ACCOUNTANT MEMBER I.T.A.NO.4676 & 4677/MUM/2010 A.YRS. 2006-07 & 2007-08 CYRUS INTERNATIONAL LIMITED ESPLANADE HOUSE HAZARIMAL SOMANI MARG FORT MUMBAI 400 001. PAN: AAACC 2880 P VS. DY. COMMISSIONER OF I.T. 1 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI JITENDRA YADAV. SR. DR O R D E R PER T.R.SOOD AM: AN ADJOURNMENT APPLICATION HAS BEEN MOVED. HOWEVER ON PERUSAL OF THE RELEVANT DOCUMENTS ON RECORD IT WAS NOTICED THAT THE COMMON ISSUE RAISED IN THESE APPEALS IS SQUARELY CO VERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF GODREJ & BOYCE MFG. CO.LTD. VS. DCIT [328 ITR 81] AND ACCORD INGLY THE ADJOURNMENT APPLICATION WAS REJECT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GRO UND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -1 MU MBAI HAS ERRED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS. 9 84 780/- FOR A.Y 2006-07 AND RS.8 12 933/- FOR A.Y 2007-08 MADE BY T HE ASSESSING OFFICER U/S.14A OF THE I.T.ACT 1961. 3. THE LD. DR WAS HEARD. 4. AFTER CONSIDERING THE SUBMISSIONS OF LD. DR AND RELEVANT MATERIAL ON RECORD WE FIND THAT DURING THE ASSESSM ENT PROCEEDINGS AO NOTED THAT ASSESSEE HAD EARNED SOME DIVIDEND INCOME . THE ASSESSEE 2 HAS HIMSELF DISALLOWED A SUM OF RS.3 16 46 404/- IN A.Y 2006-07 AND RS.2 92 83 010/- IN A.Y 2007-08. HOWEVER IN VIEW O F THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. & ORS. (2008) 119 TTJ (MUM) (S .B) 289 AO INVOKED THE PROVISIONS OF SEC.14A ALONG WITH RULE 8 D AND MADE FURTHER DISALLOWANCES AMOUNTING TO RS.1 14 29 987/- IN A.Y 2006-07 AND RS.66 86 775/- IN A.Y 2007-08. 5. THE LD. CIT(A) AFTER DETAILED DISCUSSION GAVE CE RTAIN RELIEFS. THE ASSESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY T HE LD. CIT(A). 6. AFTER CONSIDERING THE ABOVE FACTS AND SUBMISSION S OF LD. DR WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO.LTD. VS . DCIT [SUPRA] WHEREIN IT WAS HELD THAT RULE 8D HAS NO RETROSPECTI VE APPLICATION. HOWEVER AT THE SAME TIME SOME REASONABLE DISALLOWA NCE CAN BE MADE BY THE AO. IT WAS ULTIMATELY HELD BY THE HON'B LE HIGH COURT AS UNDER: HELD THAT THE PROVISIONS OF RULE 8D OF THE RULES WHICH HAVE BEEN NOTIFIED W.E.F. 24TH MARCH 2008 SHALL APPLY W ITH EFFECT FROM ASSESSMENT YEAR 2008-09. EVEN PRIOR TO ASSESSM ENT YEAR 2008-09 WHEN RULE 8D WAS NOT APPLICABLE THE ASSES SING OFFICER HAS TO ENFORCE THE PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR THAT PURPOSE THE ASSESSING OFFICER IS DUTY BOU ND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONA BLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND C IRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE AS SESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD. THE PROCE EDINGS FOR ASSESSMENT YEAR 2002-03 SHALL STAND REMANDED BACK T O THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DETE RMINE AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE ( DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FRO M MUTUAL FUNDS WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER S. 14A. THE ASSESSING OFFICER CA N ADOPT A 3 REASONABLE BASIS FOR EFFECTING THE APPORTIONMENT. W HILE MAKING THAT DETERMINATION THE ASSESSING OFFICER SHALL PRO VIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT OR GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THUS IT IS CLEAR THAT RULE 8D IS APPLICABLE ONLY F ROM A.Y 2008-09 AND IS NOT APPLICABLE FOR A.YRS. 2006-07 AND 2007-08 WHICH ARE BEFORE US. THEREFORE WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO TO RECOMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO.LTD. VS. DCIT [SUPRA]. 7. IN THE RESULT APPEALS ARE ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 2/7/2011. SD/- SD/- (D.MANMOHAN) (T.R.SOOD) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI: 22/7/2011. P/-*